The flood of utility rate requests stemming from the new controversial law created by Senate Bill 998 is about to hit the Oklahoma Corporation Commission.
“We’re gonna get flooded,” said Commissioner Todd Hiett in response to an OK Energy Today inquiry regarding a recent filing by Public Service Company of Oklahoma seeking a deferred accounting of its qualifying electric plants in service and other assets.
In an August 27 filing which was made public this week, PSO explained it gave notice to the Corporation Commission of its election “to utilize deferral accounting as authorized under the statute.” The filing came two days before SB998 took effect in the state.
“17 Okla. Stat. §286A(A), states that when a public utility elects this accounting treatment, it shall defer ninety (90%) percent of all depreciation expense and return associated with certain
qualifying electric plants placed in service.“
New electric generating units or facilities are not included in the deferral. Instead, the deferral issue falls under “Section 2” of SB998, the bill by Sen. Grant Green, R-Wellston and Rep. Trey Caldwell, R-Faxon. It was the measure that Gov. Kevin Stitt allowed to become law without his signature, a move that drew immediate critical response from the commissioners.
Section 2 means PSO will start booking assets and Commissioner Hiett called it a “real detriment to consumers.” He said the “big harm” means the utility will be able to defer the 90% of all depreciation expense perhaps for 2 years before it applies for a rate case.
But there could be a serious debate before Corporation Commissioners as to what PSO assets will fall under the utility’s request. Hiett says such assets typically include electric poles, mechanical upgrades and the like.
“The argument will be what qualifies and what doesn’t. My prediction is there will be a strong legal debate.”
Commissioner Hiett continued his heavy criticism of SB998 calling it “terrible” and is “very likely unconstitutional—terrible policy.” He also believes Section Two of the bill did not receive the amount of attention as Section One, the part of the new law that allows utilities to request rate hikes and pass along costs on “Construction While in Progress” projects.
“Section Two was overlooked and it’s amost as bad as Section One.”
Section One will also provide another challenge to Commissioners because it slashed the amount of time they will have before acting on a request for CWIP projects and costs for new power plants that utilize natural gas. The time was cut from 240 days to 180 days.
The utility requests for application of the CWIP or Section One are coming as Commissioner Hiett said PSO, Empire District and Oklahoma and Gas Electric have indicated they will be filing soon, perhaps in the next week or two. Empire District is the former name and is now known as Liberty Utilities.
OG&E’s decision came after it initially filed for a rate hike but within days in July, withdrew the request because SB998 had won legislative approval and was about to become law.
As to the constitutionality of SB998, it remains unchallenged in the Oklahoma Supreme Court. Hiett is hoping it will be and referenced an August Commission meeting where there was a suggestion by an attorney for the Oklahoma Industrial Energy Consumers that it might file such a challenge.
